NY's Schumer Jumps on Bandwagon Seeking Inquiries, Hearings into Gas Prices
Sen. Charles E. Schumer (D-NY) Monday became the fourth lawmaker to call for either federal investigations or Capitol Hill hearings into the rapid run-up in prices for natural gas since late November.
At a press conference in Rochester, NY, he urged the heads of the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (CFTC) to probe the "irregularities in the natural gas markets to determine if there are any signs of market manipulation or other improper activities that would artificially raise prices for New Yorkers," according to a press statement.
Both independent agencies have been actively monitoring gas prices for weeks (see NGI's GPI, Jan. 8). Neither FERC nor the CFTC would comment on the status of their inquiries, but one high-level source indicated that little, if anything, had been uncovered so far to suggest manipulation of the gas market.
Schumer released a report that showed heating costs for gas consumers in certain regions of New York State have risen 26% so far this winter, and will result in the typical gas homeowner paying about $128 more to heat their home this winter. He estimated the entire state will pay more than $1.9 million in gas heating costs this winter, with Monroe County (Rochester) homeowners shouldering over $29 million of the burden.
The near-record deep freeze gripping Rochester and other parts of the Northeast is contributing to the higher gas bills. The Department of Energy (DOE) estimates the average gas consumer in New York State will use 91.8 MMcf more gas during the October-to-March heating season
Gas prices have shot up with "little apparent reason," Schumer said in the statement, noting that gas inventories currently stand at approximately 3 Tcf across the country, which is almost 7% above the level at the same time last year. The DOE's Energy Information Administration, which keeps a close watch on gas stocks each week, reports that the current inventory level is closer to 2.5 Tcf.
Schumer said he believes gas prices could still go higher, given that Nymex gas futures prices have risen at a faster clip than the price of gas sold to consumers in New York. Gas futures prices have increased by almost 50% on the New York Mercantile Exchange from $4.86/Mcf on Nov. 25 to $7.29/Mcf last Friday, he noted.
He said the rapid price rise was "curious" because gas supplies and inventories are "less constricted" than they have been in recent winters. But he quickly added that he didn't believe that Nymex was to blame for the run-up.
In addition to regulatory investigations into prices, Schumer noted that the Senate Judiciary Committee -- of which he is a member -- will hold hearings in January into whether improper manipulation of gas markets has occurred. A "bipartisan consensus of the committee" believes the matter needs to be settled "once and for all," the press statement said.
Senate Judiciary Chairman Orrin G. Hatch (R-UT) said in mid-December he planned to hold hearings into the gas price run-up after the Senate returned for its second session (see NGI's GPI, Dec. 15, 2003). He made the announcement following a plea by chemical maker Huntsman LLC of Salt Lake City, UT, which alleged the price swings were the result of "greed and, very possibly, dishonesty" of traders.
Sen. Harry Reid (D-NV) at the same time urged the Senate Energy and Natural Resources Committee to examine the volatility of the gas markets and the elevated price levels.
Not to be outdone by his colleagues, Sen. Joe Lieberman (D-CT) in late December asked FERC and the CFTC to launch a full review to determine why gas prices have risen even though the supply-demand equation at key trading hubs appears to be in sync. A press aide for Lieberman said Monday that neither agency had responded yet.